BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION COMMENTS OF VERIZON FLORIDA INC.

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1 BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION In re: Phone-to-Phone Internet Protocol ) Undocketed Telephony (Voice Over Internet Protocol) ) Filed: February 28,2003 COMMENTS OF VERIZON FLORIDA INC. Pursuant to the request for comments in the Notice of Staff Workshop (Notice), Verizon Florida Inc. (Verizon FL) respectfully submits these comments on Internet protocol (IP) telephony (voice over Internet protocol (VOIP)). I. INTRODUCTION These comments address the three major issues set forth in the Notice: (1) what is IP telephony and how does it compare to conventional telephone service?; (2) what are the economics of IP telephony and what impact will it have on the telecommunications marketplace?; and (3) what is the current state of the law on VOIP telephony? IP telephony generally refers to voice or facsimile services that are transported - in whole or in part - over an IP network in lieu of the traditional circuit-switched network. IP telephony may be offered in various configurations over different types of networks to provide a wide array of services. Although it is hard to predict what impact IP telephony will have on the telecommunications marketplace, its impact will depend in part on the regulatory policies set by state commissions and the Federal Communications Commission (FCC). In order to promote competition and benefit consumers, this Commission should maintain a level field of competition between traditional circuit-switched and IP technologies. In particular, the Commission should not allow phone-to-phone IP telephony providers to avoid paying access charges; these providers use the public switched telephone network (PSTN) in providing their rac0224a.rac

2 services, and they should pay for that use consistent with applicable exchange access tariffs or interconnection agreements. The law governing phone-to-phone IP telephony is simple and straightforward. Both state and federal law require VOIP providers to pay access charges on phone-to-phone IP calls. Because the law regarding VOIP calls involving personal computers is still evolving, the primary focus of Verizon FL s comments on the law is on phone-to-phone telephony. A more detailed discussion of the foregoing issues is set forth below. 11. TECHNICAL ASPECTS A. Identification Of Network Elements Used to Process An IP Telephone Call And Functionality Of Each Element IP telephony generally refers to voice or facsimile services that are transported at least partially over an IP network instead of the traditional circuit-switched network. The basic steps involved in a VOIP call are the conversion of the analog signal to a digital signal and the subsequent translation of that signal to packets of data for transmission over a packetized network such as the Internet or any privately owned network that uses IP protocol technology. The reverse process occurs at the packets receiving end, where the packets are reassembled in the proper sequence, and then converted back to analog. The devices performing the analog voice-to-packet and back conversions may be, among others, IP phones, premises gateways or network gateways. Today, the PSTN primarily relies on circuit-switched technology. However, in the future, the PSTN may employ packet-switched technology in place of portions of the existing circuit-switched network. It is therefore somewhat misleading to contrast VOIP traffic with traffic carried over the PSTN, as both circuit-switched and packet switched technologies may be employed on the PSTN. 2

3 IP telephony may be offered in various configurations. It may be offered between two personal computers (PCs), between a traditional telephone and a PC, or between two traditional telephones. In the PC-to-PC configuration, the caller may dial via computer using a telephone number (standard or proprietary) or may "dial" by using an IP address. The PSTN is not used to switch the call, so IP addresses rather than the traditional seven or ten-digit North American Numbering Plan (NANP) telephone numbers may be used to identify the desired terminating party. The only use of the PSTN in this scenario could be to connect the computers to an IP network through an Internet Service Provider (ISP), although this function could also be accomplished using cable modem, WiFi or some other non-pstn-based access. The PC-to-phone configuration employs a single gateway that translates IP packets to Pulse Code Modulated (PCM) traffic suitable for travel over the PSTN and vice versa.3 In this configuration, the PSTN is used to switch the call to the terminating telephone. Therefore, users must "dial" a terminating party by inputting a seven or ten-digit NANP telephone n~mber.~ The * A diagram showing the basic steps involved in a VOIP in each of these configurations is attached hereto as Exhibit A. 3 A gateway is a software or hardware application that permits communications between different networks using different protocols. The PC-to-phone configuration is sometimes used by large business customers to consolidate voice and data traffic onto a single network. For example, customers using PBX switches or Centrex service may consolidate their voice network onto their existing Local Area Network (LAN). In the IP PBX configuration, the customer deploys a gateway compatible with its existing PBX to translate packetized voice traffic into a form suitable to travel over the PSTN. In the Centrex configuration, a carrier deploys this gateway. In either IP PBX or an IP Centrex configuration, a VOIP phone may be used in lieu of a PC. A VOIP phone, used on an Ethernet LAN connection, may be designed to look and work just like a conventional Plain Old Telephone Service (POTS) phone, but it plugs into an Ethernet RJ-45 wall jack instead of the traditional RJ-1 1 analog telephone jack. In this scenario, the functionality of a PC used for IP Telephony is placed in the VOIP phone. In other words, the digitization of an analog voice signal and subsequent packetization actually occurs in a VOIP phone rather than in a PC. 3

4 computer may or may not have a telephone number assigned to it, which may or may not be sent to the receiving carrier/subscriber as the calling party number. The phone-to-pc configuration also employs a single gateway. To initiate a call, the originating party either dials an access telephone number to reach a gateway or, if a telephone number has been assigned to the VOIP PC, the originating party dials the number directly. The PSTN routes the call to a gateway that connects the PSTN to an IP network. Beyond the gateway, the IP network is used to route the call to the terminating party. The phone-to-phone configuration employs two gateways. In some configurations, the originating party first dials an access telephone number to access a gateway. In others, the originating party may dial the terminating party s telephone number directly to access a gateway. Once a connection is established with the gateway, the party dials the terminating party s telephone number using a seven or ten-digit NANP telephone number from a conventional teleph~ne.~ In either case, there are three basic steps: (1) the PSTN routes the call to the first gateway, (2) an IP network carries the call to the second gateway, and (3) the PSTN carries the call to the terminating party. B. Numbering Issues It is not necessary to modify the existing numbering administration guidelines to address phone-to-phone VOIP calls because: (1) these calls originate and terminate in the same manner as traditional circuit-switched calls carried over the PSTN; and (2) the originating and terminating telephones have numbering assignments that conform to existing numbering administration guidelines. However, it may be necessary to modify the existing guidelines to 5 The telephone number is a unique telephone number that has been assigned to a user who has registered for this particular service. 4

5 address VOIP calls between a phone and a PC.6 Some of the numbering administration issues arising from this configuration are discussed below First, this configuration gives rise to porting issues because some VOIP providers are using their CLEC partners to provide their end users with virtual NXX codes (b, codes that do not correspond to the rate center in which the end user is physically located), and it is not clear how to port numbers where the end user has a virtual NXX code.7 In other words, the existing guidelines only address the situation where the end user is physically located in AreaA (=, Miami) and receives an NXX code that corresponds to the rate center for Area A (Miami). The guidelines do not address the situation where the end user is physically located in AreaA (Miami) but receives an NXX code that corresponds to the rate center for Area B (x, New York). Second, the existing guidelines do not clearly delineate the numbering responsibilities, such as number resource utilization and forecasting (NRUF) reporting responsibilities, of the local exchange carrier (LEC) when a VOIP provider makes available the telephone number to the end user. For example, the guidelines clearly delineate the reporting responsibilities of the LEC in the traditional scenario where the North American Numbering Plan Administration (NANPA) assigns a number to the LEC and the LEC, in turn, makes the number available to the end user. However, the guidelines do not address the scenario where the NANPA assigns a number to the LEC, the LEC makes that number available to a VOIP provider, and the VOIP provider makes the number available to the end user. This topic was recently the subject of An ATIS Industry Numbering Committee (INC) workshop addressing these issues is scheduled to take place in Tampa during the second week of May This issue is not limited to VOIP. CLECs also assign NXX codes to distant locations to provide toll free Internet dial up capability. 5

6 discussion among the members of the North American Numbering Counsel (NANC). During these discussions, the California Public Utilities Commission and the Michigan Public Utilities Commission contended that numbers made available to end users by VOIP providers should be treated as intermediate numbers. Third, the PC-to-phone configuration raises number forecasting issues because there is no established method of accurately forecasting number utilization in an environment where customers are able to obtain virtual NXX codes. Traditional forecasting methods, which are based on the number of people in the subject rate center, may not be viable if people physically located in the rate center are not the only ones who may obtain NXX codes corresponding to that rate center.' C. E911 - Ability Of VOIP to Identify The Caller And Address And Deliver The Information To The Correct Public Switched Answering Point The ability to identify the caller and address and deliver the information to the correct Public Safety Answering Point (PSAP) varies based on the service offering. For phone-to-phone IP telephony in which the caller uses a traditional telephone to call another traditional telephone and the service provider uses IP transport, the call will be delivered to the correct PSAP with the correct information. Other services that rely on IP addresses present a greater challenge to the emergency services community. For example, one of the fundamental challenges with IP PBX and IP Centrex services is that users with a mobile IP address are permitted to freely move about the IP network. The free geographic movement of the IP address in the IP Centex and PBX environment presents a challenge to existing IP technology to (1) identify a caller's location and 8 Again, as stated in footnote seven, above, this issue is not limited to VOIP. CLECs also assign NXX codes to distant locations to provide toll free Internet dial up capability. 6

7 (2) deliver the caller s information to the correct PSAP. In the traditional circuit-switched environment, the E91 1 operator retrieves the caller s address by plugging the caller s telephone number- which is tied to a specific geographic location- into the Automatic Location Identification (ALI) database. This process presents a greater challenge with an IP PBX or IP Centrex service because these services are not tied to a specific geographic location. Many VOIP service providers do not provide E911 service to their customers. Where VOIP service is the only source of telecommunications at a given location, the VOIP service provider should be required to provide 911 service to that location. D. E911 - Funding E911 services are funded through end user surcharges. To the extent that VOIP service providers make use of E9 11 services, they should participate in the surcharge process. E. Directory And Information Service Telephone Number Listings LECs have requirements to list telephone numbers in telephone directories for providers of telephone exchange and telephone toll services. If a VOIP provider is classified as a provider of telephone exchange and telephone toll services, the LEC would have the obligation to list the telephone number of the VOIP service provider s customer in its telephone directories. F. Billing Format And Content Verizon FL does not provide VOIP services, so it cannot comment on how its customers are billed for such services in Florida. Verizon is canvassing other areas of its footprint to determine how its VOIP services are billed, and Verizon will report its findings to Staff. G. TDD Compatibility TDD, which is also known as a Text Telephone or TTY, enables people with hearing impairments or speech impediments to communicate over the telephone by typing messages back 7

8 and forth. The majority of TTYs in the United States use Baudot tones to transmit signals at a speed of 45.5 baud. The typed messages are encoded in Baudot, transmitted across the telephone network, and decoded at the recipient's end. Providers of telecommunications services must ensure that their services are accessible to and usable by individuals with disabilities, including the hearing impaired, if this goal is readily a~hievable.~ At least one manufacturer has raised concerns about the compatibility of TTY with Voice over Internet Protocol because transmission techniques used with VOIP services may be a barrier to TTY compatibility." In a VOIP call, the encoded audio steam is broken into individual packets, tagged with bearer information and then delivered to the network. In this process occasional packets may be lost, which would not be detectible in voice communication but may have an adverse impact on TTY, particularly if the lost packet is a stop tone. Recognizing these potential concerns, the Telecommunication Industry is actively working to address TTY compatibility issues. For example, The Alliance for Telecommunications Industry Solutions (ATIS) has recently created the VOIP TTY Forum (VTTY). The mission of this forum is to identify requirements, define solutions and test the standards that support text conversation over VOIP networks. More information regarding this issue can be obtained on the ATIS website at H. What Services Can VOIP Provide That Wireline Cannot? Verizon is unaware of any services offered using VOIP that cannot be duplicated on the wireline network through the integration of computers with telephony. However, what makes 47 U.S.C (c). lo Paul Michaelis, Transmission of TTY tones on Voice over Internet Protocol (VOIP) Systems (this paper is available at the IVR Forum website at ATIS.org.) 8

9 the PC-based version of VOIP so unique is the presence of an internet-connected computer. This allows services to take advantage of easy access to distributed databases, plus the rich display capability provided by a computer and web-browser. This combination makes it easy to provide visual directory services, click-to-call functionality, integration with presence management tools like Instant Messaging availability status, plus the ease with which service portability is enabled (unplug from your home broadband connection, plug into hotel broadband connection and the service is there). I. What Does The Future Hold For VOIP Technology? To ensure the brightest possible future for all technologies, including VOIP, the Commission should establish policies that allow all service providers to operate on a level competitive playing field. This will allow all service providers to compete efficiently and send accurate price signals to the market - outcomes that will ultimately benefit ratepayers. J. What Impact Will VOIP Have On The Economy Of Florida? VOIP has the potential to negatively or positively affect the economy of Florida, depending on the policy decisions made by this Commission and the FCC. VOIP could have a negative effect on Florida s economy if long distance carriers are allowed to use VOIP as a means to circumvent intercarrier compensation charges, including access charges. As this Commission is aware, universally available local exchange service in Florida is paid for with a combination of end user charges and intercarrier compensation, particularly switched access charges. If long distance carriers are allowed to use VOIP to avoid paying access charges, the economic viability of local exchange carriers, especially smaller ILECs, may be seriously threatened. The ramifications of this could be service quality deterioration, employee layoffs, decreased investment and an overall decline of companies that rely on access charges to support 9

10 the provision of service at below-cost prices consistent with existing Florida policy. Of course, this worst-case scenario can be avoided by (1) ensuring that competitive providers are not allowed to use VOIP to by-pass appropriate access charges; and (2) rebalancing rates to eliminate the disparity between local, toll and interstate rates. On the positive side, new, innovative and potentially more affordable VOIP services may help to spur demand for always-on broadband connections. More ubiquitous broadband promises to boost economic output by improving personal and business productivity. It also promises to benefit society by giving a broad cross-section of Florida s population greater access to information. K. What Impact Will VOIP Have On State Taxes? The impact of VOIP on state taxes will be a function of at least two variables. k t, it will depend on whether VOIP is interpreted to be a technology that is subject to the various state taxes paid by providers (u, state communications services tax). Second, it will depend on whether this Commission issues policy decisions regarding VOIP that have a positive or negative impact on the economy of Florida. As stated above, the Commission should be able to avoid negatively impacting the economy - and thereby maintain or increase the existing tax base - by making certain that companies do not use VOIP to avoid appropriate access charges SERVICE QUALITY A. Network Quality And Reliability IP telephony relies on the Internet Protocol, which is an unconfirmed delivery service. Most data networks and the Internet have not been designed with the same availability requirements as the PSTN, and thus service availability may be impacted. The Internet - and the 10

11 services dependent on it - are also subject to intervention by hackers. Such intervention, in the form of denial of service attacks, may affect the availability of service. VOIP can offer tradeoffs between voice quality and network and carrier efficiency. Transporting voice over an IP network, rather than over a traditional circuit-switched network, increases efficiency in three ways. First, it allows for the consolidation of voice and data onto a single network. Second, it does not require a dedicated path for each call." Third, it employs complex compression algorithms in the analog-to-digital conversion, which means that less bandwidth is occupied than would otherwise be occupied on circuit-switched network. However, transporting voice over an IP network, rather than over a traditional circuit- switched network, may also reduce service quality because each router independently determines a packet's path and different packets may arrive at a destination at different times and/or out of sequence. This can lead to increased latency (the time it takes for a packet to cross a network connection from sender to receiver), jitter (the random variation in the time it takes a packet to reach its destination), and packet loss. It is theoretically possible, however, to provide VOIP that does not touch the PSTN with higher than toll quality (k, higher quality than is provided by the PSTN). This may be accomplished by using high fidelity vocoders that faithfully reproduce the full audio spectrum of human voice rather than the narrow slice (less than 4000hz) of traditional telephony. Of course, it is very expensive to provide such high quality service. Industry groups have developed standard protocols such as Session Initiation Protocol (SIP) and H.323 protocol that have significantly improved VOIP by outlining Quality of Service (QOS) parameters that permit voice prioritization and voice traffic management and engineering. In fact, all of Microsoft's Windows l1 Unlike a call carried over a circuit-switched network, a call carried over an IP network occupies bandwidth only when voice packets are being transmitted. 11

12 XP software include the SIP protocol within it for PC-to-PC communication. In addition, firms with enabling technologies for VOIP performance management, security, and network address translation are readily available. The service quality provided over an IP network should be determined by the marketplace. VOIP equipment and service providers should be allowed to experiment with various combinations of price and quality and consumers should be permitted to decide for themselves which combination is best for them. B. Types Of VOIP Services Provided Verizon FL does not currently provide VOIP services, so it cannot comment on the types of services provided in Florida. Verizon is canvassing other areas of its footprint to determine the types of services that are provided in other states, and Verizon will report its findings to Staff. C. Handling Of Customer Complaints Because Verizon FL does not currently provide VOIP services, it does not have a process in place for handling VOIP customer complaints in Florida. Verizon is canvassing other areas of its footprint to determine how VOIP customer complaints are handled in other states, and Verizon will report its findings to Staff. D. Compliance With Service Quality Standards Because Verizon FL does not currently provide VOIP services, there are no service quality standards that apply to it in Florida. Verizon is canvassing its footprint to determine what service quality standards, if any, apply, and Verizon will report its findings to Staff. IV. ECONOMICS A. Economics Of VOIP Versus Switched Telephony 12

13 Fundamentally, phone-to-phone VOIP is not significantly cheaper than circuit-switched telephony. Gateways are required at both ends of the call and transport must be provided. Any network savings that may occur typically come from efficiencies derived from running one converged network rather than separate voice and data networks. Also, the VOIP architecture will allow more rapid development and deployment of new services. Very often the motivation for offering this type of service comes from bypassing the appropriate forms of interconnectiodcompensation for long distance phone calls (k, access charges for domestic calls and settlements for international calls). B. What Compensation Is Made By VOIP Providers To Other Service Providers Involved In Phone-To-Phone IP Telephony Calls (h, Reciprocal Compensation, Access Charges, Etc.)? Providers of VOIP services that originate from or terminate to the PSTN (h, phone-to- phone IP telephony and the phone side of a call between a PC and a phone) should be required to pay appropriate intercamier compensation, including intrastate and interstate access charges and reciprocal compensation, because they are providing a telecommunications service that makes use of the PSTN. C. What Contributions Are Made To The Universal Service Fund By VOIP Providers? Under federal law, the phone-to-phone VOIP provider should be contributing to the federal universal service fund if its service constitutes a telecommunications service within the meaning of the Act.I2 * 47 U.S.C. $5 254(b)(4) and (d). 13

14 D. What Is The Impact Of VOIP On Competition? The impact of VOIP on competition will depend in part on the regulatory environment. As stated above, the best way to promote competition would be to address the stand alone POTS portions of a phone-to-phone VOIP call in parity with the regulation applied to all other traditional telecommunications services. There is no reason for this Commission, rather than the consumer, to decide which technologies should succeed in the telecommunications marketplace. E. How Does VOIP Foster Competition? VOIP will foster competition to the extent that it is perceived to be a viable substitute for other services and it is competitively priced. Of course, VOIP will foster efficient competition only if it achieves these goals without having the regulatory scales tipped in its favor. V. CURRENT STATE OF THE LAW REGARDING VOIP A. Applicability Of Interstate Access Charges To VOIP Federal law requires providers of VOIP services that originate from or terminate to the PSTN to pay intercarrier compensation charges, including access charges and reciprocal compensation. This section will focus on the payment of access charges because it was the subject of much debate at the workshop. Part69 of the Commission s rules establishes LEC interstate access charges and prescribes who must pay them. Section 69.5(b) of those rules provides that [c]arrier s carrier charges shall be computed and assessed upon all interexchange carriers that use local exchange switching facilities for the provision of interstate or foreign telecommunications services. Therefore, interexchange carriers must pay access when they use local switching to provide interstate telecommunications services. 14

15 First, providers of phone-to-phone IP telephony are interexchange carriers. Although neither the Telecommunications Act of 1996 (Act) nor the FCC s rules define interexchange carrier, section 3(10) of the Act defines carrier as any person engaged as a common carrier for hire, in interstate or foreign communication by wire or radio, and section 3(44) defines telecommunications carrier as any provider of telecommunications services, except that such term does not include aggregators of telecommunications services (as defined in section 226 of this title). A telecommunications carrier shall be treated as a common carrier under this chapter only to the extent that it is engaged in providing telecommunications services. As discussed below, a provider of phone-to-phone IP telephony is a provider of telecommunications services and is engaged as a common carrier for hire, in interstate or foreign communication by wire or radio. Second, providers of phone-to-phone IP telephony use local switching. As stated above, they use the circuit switches of the PSTN to route calls from the originating party to the first gateway and from the second gateway to the terminating party. Third, phone-to-phone IP telephony is a telecommunications service. Some background may be useful here. Section 3(43) of the Act provides that the term telecommunications means the transmission, between or among points specified by the user, of information of the user s choosing, without change in the form or content of the information as sent and received. Section 3(46) of the Act provides that the term telecommunications service means the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used. And Section 3(20) of the Act provides that the term information service means the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, 15

16 utilizing, or making available information via telecommunications, and includes electronic publishing, but does not include any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service. In its 1998 report to Congress,13 the FCC determined that [tlhe record currently before us suggests that certain forms of phone-to-phone IP telephony services lack the characteristics that would render them information services within the meaning of the statute, and instead bear the characteristics of telecommunications services. In reaching this determination, the FCC carefully analyzed the Act s definitions. First, it discussed the meaning of telecommunications service : A telecommunications service is a telecommunications service regardless of whether it is provided using wireline, wireless, cable, satellite, or some other infrastructure. Its classification depends rather on the nature of the service being offered to customers. Stated another way, if the user can receive nothing more than pure transmission, the service is a telecommunications service. If the user can receive enhanced functionality, such as manipulation of information and interaction with stored data, the service is an information service. l4 The Commission then applied this analysis to phone-to-phone IP telephony. It defined phone-to-phone IP telephony as a service that: (a) holds itself out as providing voice telephony sewice; (b) does not require the customer to use CPE different from that CPE necessary to place an ordinary touch-tone call over the public switched telephone network; (c) allows the customer to call telephone numbers assigned in accordance with the North American Numbering Plan, and associated international agreements; and (d) transmits customer information without net change in form or content. 13 Federal-State Joint Board On Universal Service, 13 FCC Rcd 11,501 (1998) (1998 Report). l Report at

17 Finally, the FCC concluded that the record suggests that phone-to-phone telephony is a telecommunications service. More specifically, the FCC stated that: When an IP telephony service provider deploys a gateway within the network to enable phone-to-phone service, it creates a virtual packet-switched IP network. These providers typically purchase dial-up or dedicated circuits from carriers and use those circuits to originate or terminate only voice transmission, rather than information services such as access to stored files. The provider does not offer a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information. Thus, the record before us suggests this type of IP telephony lacks the characteristics that would render them information services within the meaning of the statute, and instead bear the characteristics of telecommunications services. Under the FCC s construction of the Act, phone-to-phone IP telephony is a telecommunications service that cannot avoid access charges. B. How Have Other States Addressed VOIP? The New York Public Service Commission (NYPSC) has addressed VOIP. The NYPSC addressed this issue in the context of a complaint filed by Frontier against DataNet, alleging that DataNet failed to pay intrastate access charges owing on phone-to-phone IP calls. In evaluating the complaint, the NYPSC exhaustively analyzed the FCC s 1998 Report. It found that the FCC has not in any way determined that phone-to-phone IP telephony is exempt from access charges. To the contrary, it explained that the FCC has found that these services lack the characteristics of information services that would exempt them from access charges, and instead have the characteristics of telecommunications services that are subject to access charges. l5 Complaint of Frontier Telephone Of Rochester Against US DataNet Corporation Concerning Alleged Refusal To Pav Intrastate Carrier Access Charges, Case 01 -C , Order Requiring Payment Of Intrastate Carrier Access charges (Issued and Effective May 3 1, 2002) (Available on the NYPSC website at pdf. 17

18 The NYPSC applied the FCC s analysis to DataNet. In particular, the NYPSC found that: (1) DataNet holds itself out as providing voice telephony service; (2) DataNet does not provide enhanced functionality such as storing, processing or retrieving information; (3) customers are not required to use anything other than ordinary CPE; (4) customers dial calls using the North American Numbering Plan; (5) DataNet s use of IP is only within its own private network and does not result in any net protocol conversion to the end user; (6) a substantial portion of DataNet s traffic uses no IP conversion at all; and (7) DataNet uses the same circuit-switched access from local exchange carriers as other IXCs and imposes the same burdens on the local exchange as other IXCS. Finally, the NYPSC concluded that the phone-to-phone IP telephony service provided by DataNet is a telecommunications service subject to access charges. More specifically, the NYPSC ruled that DataNet s service is: simple, transparent long distance telephone service, virtually identical to traditional circuit-switched carriers. Its service fits the definition of telec~mm~nications contained in the 1996 Telecommunications Act and is not information service or enhanced service. Thus, its traffic is access traffic just like any other IXC s traffic. We also conclude that DataNet imposes the same burdens on the local exchange as do other interexchange carriers and should pay all applicable and appro riate charges paid by other long distance carriers, including access charges. l r The Colorado Public Utilities Commission reached a contrary result. In a decision on an arbitration petition filed by ICG, which does not have any precedential effect beyond the l6 - Id. at

19 interconnection agreement that was being arbitrated, the Colorado Commission ruled that access charges do not apply to the VOIP calls routed from ICG to Qwest.17 C. Applicability Of Intrastate Access Charges To VOIP Florida law, like federal law, requires phone-to-phone IP telephony providers to pay access charges. Section , Florida Statutes, defines local access service as any service provided by a local exchange telecommunications company to a telecommunications company certificated under this chapter or licensed by the Federal Communications Commission to access the local exchange telecommunications network... Therefore, a telecommunications company must pay access when it uses any service to access the local exchange telecommunications network. Providers of phone-to-phone IP telephony are in fact telecommunications companies. Section ( 12), Florida Statutes, provides that the term telecommunications company encompasses every corporation, partnership, and person... offering two-way telecommunications service to the public for hire within this state by use of a telecommunications facility. Although two-way telecommunications service is not defined in the Florida Statutes, the term service is to be construed in its broadest and most inclusive sense, and the term telecommunications facility includes real estate, easement, apparatus, property, and routes used and operated to provide two-way telecommunications service to the public for hire within this state. Given these expansive definitions and the fact that there is no net change in protocol as sent and received in the phone-to-phone configuration, providers of Petition by ICG Telecom Group, Inc. For Arbitration Of An Interconnection Agreement With US West Communications, Inc., No. COO-858 (Colo. Pub. Util. Comm n Aug. 1,2000). Section (11) (emphasis added). l9 Section (13). 19

20 phone-to-phone IP telephony offer telecommunications services and therefore are telecommunications companies. Moreover, phone-to-phone IP telephony providers are clearly using a service to gain access to the local exchange telecommunications network. Indeed, it is undisputed that these providers use the PSTN to direct calls to and from their IP gateways. Accordingly, Florida law, like federal law, compels the payment of access charges on phone-to-phone IP calls. VI. CONCLUSION For the foregoing reasons, the Commission should follow the recommendations set forth herein. Respectfully submitted on February 28,2003. By: Richard Chapkis P. 0. Box 110, FLTC0007 Tampa, FL (813) Attorney for Verizon Florida Inc. 20

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